EconGeo (version 2.0)

location_quotient: Compute location quotients from regions - industries matrices

Description

This function computes location quotients from (incidence) regions - industries matrices. The numerator is the share of a given industry in a given region. The denominator is the share of a this industry in a larger economy (overall country for instance). This index is also refered to as the index of Revealed Comparative Advantage (RCA) following Ballasa (1965), or the Hoover-Balassa index.

Usage

location_quotient(mat, binary = FALSE)

Value

A matrix of location quotients computed from the regions - industries matrix. If the 'binary' parameter is set to TRUE, the returned matrix will contain binary values (0/1) representing the location quotient. If 'binary' is set to FALSE, the full values of the location quotient will be returned.

Arguments

mat

An incidence matrix with regions in rows and industries in columns

binary

Logical; shall the returned output be a dichotomized version (0/1) of the location quotient? Defaults to FALSE (the full values of the location quotient will be returned), but can be set to TRUE (location quotient values above 1 will be set to 1 & location quotient values below 1 will be set to 0)

Author

Pierre-Alexandre Balland

References

Balassa, B. (1965) Trade Liberalization and Revealed Comparative Advantage, The Manchester School 33: 99-123.

See Also

rca

Examples

## generate a region - industry matrix
mat <- matrix(
  c(
    100, 0, 0, 0, 0,
    0, 15, 5, 70, 10,
    0, 20, 10, 20, 50,
    0, 25, 30, 5, 40,
    0, 40, 55, 5, 0
  ),
  ncol = 5, byrow = TRUE
)
rownames(mat) <- c("R1", "R2", "R3", "R4", "R5")
colnames(mat) <- c("I1", "I2", "I3", "I4", "I5")

## run the function
location_quotient(mat)
location_quotient(mat, binary = TRUE)